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Republic of the Philippines


G.R. No. L-34964 January 31, 1973
CHINA BANKING CORPORATION and TAN KIM LIONG, petitioners-appellants,
HON. WENCESLAO ORTEGA, as Presiding Judge of the Court of First Instance of Manila, Branch VIII,
and VICENTE G. ACABAN, respondents-appellees.
Sy Santos, Del Rosario and Associates for petitioners-appellants.
Tagalo, Gozar and Associates for respondents-appellees.

The only issue in this petition for certiorari to review the orders dated March 4, 1972 and March 27, 1972,
respectively, of the Court of First Instance of Manila in its Civil Case No. 75138, is whether or not a banking
institution may validly refuse to comply with a court process garnishing the bank deposit of a judgment debtor,
by invoking the provisions of Republic Act No. 1405. *
On December 17, 1968 Vicente Acaban filed a complaint in the court a quo against Bautista Logging Co., Inc.,
B & B Forest Development Corporation and Marino Bautista for the collection of a sum of money. Upon motion
of the plaintiff the trial court declared the defendants in default for failure to answer within the reglementary
period, and authorized the Branch Clerk of Court and/or Deputy Clerk to receive the plaintiff's evidence. On
January 20, 1970 judgment by default was rendered against the defendants.
To satisfy the judgment, the plaintiff sought the garnishment of the bank deposit of the defendant B & B Forest
Development Corporation with the China Banking Corporation. Accordingly, a notice of garnishment was
issued by the Deputy Sheriff of the trial court and served on said bank through its cashier, Tan Kim Liong. In
reply, the bank' cashier invited the attention of the Deputy Sheriff to the provisions of Republic Act No. 1405
which, it was alleged, prohibit the disclosure of any information relative to bank deposits. Thereupon the plaintiff
filed a motion to cite Tan Kim Liong for contempt of court.
In an order dated March 4, 1972 the trial court denied the plaintiff's motion. However, Tan Kim Liong was
ordered "to inform the Court within five days from receipt of this order whether or not there is a deposit in the
China Banking Corporation of defendant B & B Forest Development Corporation, and if there is any deposit, to
hold the same intact and not allow any withdrawal until further order from this Court." Tan Kim Liong moved to
reconsider but was turned down by order of March 27, 1972. In the same order he was directed "to comply with
the order of this Court dated March 4, 1972 within ten (10) days from the receipt of copy of this order, otherwise
his arrest and confinement will be ordered by the Court." Resisting the two orders, the China Banking
Corporation and Tan Kim Liong instituted the instant petition.
The pertinent provisions of Republic Act No. 1405 relied upon by the petitioners reads:
Sec. 2. All deposits of whatever nature with banks or banking institutions in the Philippines
including investments in bonds issued by the Government of the Philippines, its political
subdivisions and its instrumentalities, are hereby considered as of absolutely confidential
nature and may not be examined, inquired or looked into by any person, government official,
bureau or office, except upon written permission of the depositor, or in cases of impeachment,
or upon order of a competent court in cases of bribery or dereliction of duty of public officials,
or in cases where the money deposited or invested is the subject matter of the litigation.
Sec 3. It shall be unlawful for any official or employee of a banking institution to disclose to
any person other than those mentioned in Section two hereof any information concerning said
Sec. 5. Any violation of this law will subject offender upon conviction, to an imprisonment of
not more than five years or a fine of not more than twenty thousand pesos or both, in the
discretion of the court.
The petitioners argue that the disclosure of the information required by the court does not fall within any of the
four (4) exceptions enumerated in Section 2, and that if the questioned orders are complied with Tan Kim Liong
may be criminally liable under Section 5 and the bank exposed to a possible damage suit by B & B Forest
Development Corporation. Specifically referring to this case, the position of the petitioners is that the bank
deposit of judgment debtor B & B Forest Development Corporation cannot be subject to garnishment to satisfy
a final judgment against it in view of the aforequoted provisions of law.
We do not view the situation in that light. The lower court did not order an examination of or inquiry into the
deposit of B & B Forest Development Corporation, as contemplated in the law. It merely required Tan Kim
Liong to inform the court whether or not the defendant B & B Forest Development Corporation had a deposit in
the China Banking Corporation only for purposes of the garnishment issued by it, so that the bank would hold
the same intact and not allow any withdrawal until further order. It will be noted from the discussion of the
conference committee report on Senate Bill No. 351 and House Bill No. 3977, which later became Republic Act
1405, that it was not the intention of the lawmakers to place bank deposits beyond the reach of execution to
satisfy a final judgment. Thus:
Mr. MARCOS. Now, for purposes of the record, I should like the Chairman of the Committee
on Ways and Means to clarify this further. Suppose an individual has a tax case. He is being
held liable by the Bureau of Internal Revenue for, say, P1,000.00 worth of tax liability, and
because of this the deposit of this individual is attached by the Bureau of Internal Revenue.
Mr. RAMOS. The attachment will only apply after the court has pronounced sentence
declaring the liability of such person. But where the primary aim is to determine whether he
has a bank deposit in order to bring about a proper assessment by the Bureau of Internal
Revenue, such inquiry is not authorized by this proposed law.
Mr. MARCOS. But under our rules of procedure and under the Civil Code, the attachment or
garnishment of money deposited is allowed. Let us assume, for instance, that there is a
preliminary attachment which is for garnishment or for holding liable all moneys deposited
belonging to a certain individual, but such attachment or garnishment will bring out into the
open the value of such deposit. Is that prohibited by this amendment or by this law?
Mr. RAMOS. It is only prohibited to the extent that the inquiry is limited, or rather, the inquiry is
made only for the purpose of satisfying a tax liability already declared for the protection of the
right in favor of the government; but when the object is merely to inquire whether he has a
deposit or not for purposes of taxation, then this is fully covered by the law.
Mr. MARCOS. And it protects the depositor, does it not?
Mr. RAMOS. Yes, it protects the depositor.
Mr. MARCOS. The law prohibits a mere investigation into the existence and the amount of the
Mr. RAMOS. Into the very nature of such deposit.
Mr. MARCOS. So I come to my original question. Therefore, preliminary garnishment or
attachment of the deposit is not allowed?
Mr. RAMOS. No, without judicial authorization.
Mr. MARCOS. I am glad that is clarified. So that the established rule of procedure as well as
the substantive law on the matter is amended?
Mr. RAMOS. Yes. That is the effect.
Mr. MARCOS. I see. Suppose there has been a decision, definitely establishing the liability of
an individual for taxation purposes and this judgment is sought to be executed ... in the
execution of that judgment, does this bill, or this proposed law, if approved, allow the
investigation or scrutiny of the bank deposit in order to execute the judgment?
Mr. RAMOS. To satisfy a judgment which has become executory.
Mr. MARCOS. Yes, but, as I said before, suppose the tax liability is P1,000,000 and the
deposit is half a million, will this bill allow scrutiny into the deposit in order that the judgment
may be executed?
Mr. RAMOS. Merely to determine the amount of such money to satisfy that obligation to the
Government, but not to determine whether a deposit has been made in evasion of taxes.
xxx xxx xxx
Mr. MACAPAGAL. But let us suppose that in an ordinary civil action for the recovery of a sum
of money the plaintiff wishes to attach the properties of the defendant to insure the satisfaction
of the judgment. Once the judgment is rendered, does the gentleman mean that the plaintiff
cannot attach the bank deposit of the defendant?
Mr. RAMOS. That was the question raised by the gentleman from Pangasinan to which I
replied that outside the very purpose of this law it could be reached by attachment.
Mr. MACAPAGAL. Therefore, in such ordinary civil cases it can be attached?
Mr. RAMOS. That is so.
(Vol. II, Congressional Record, House of Representatives, No. 12, pp. 3839-3840, July 27,
It is sufficiently clear from the foregoing discussion of the conference committee report of the two houses of
Congress that the prohibition against examination of or inquiry into a bank deposit under Republic Act 1405
does not preclude its being garnished to insure satisfaction of a judgment. Indeed there is no real inquiry in
such a case, and if the existence of the deposit is disclosed the disclosure is purely incidental to the execution
process. It is hard to conceive that it was ever within the intention of Congress to enable debtors to evade
payment of their just debts, even if ordered by the Court, through the expedient of converting their assets into
cash and depositing the same in a bank.
WHEREFORE, the orders of the lower court dated March 4 and 27, 1972, respectively, are hereby affirmed,
with costs against the petitioners-appellants.
Zaldivar, Castro, Fernando, Barredo, Makasiar, Antonio and Esguerra, JJ., concur.
Concepcion, C.J. and Teehankee, J., took no part.

* An Act Probihiting Disclosure of or Inquiry into, Deposits with any Banking Institution and
Providing Penalty Therefor.